Editor's note: A prior version of this story had an incorrect headline.
NEWMARKET, Ontario—AirBoss of America Corp. reported lower net sales and operating income in the first quarter of 2017, according to its financial statement.
Net sales dipped marginally to $69.9 million from $70.4 million in the first quarter of 2016, a difference of about 1 percent, as increased sales in the Rubber Solutions segment were more than offset by decreases in the Engineered Products segment.
Operating income decreased to $11.1 million from $13.2 million in 2016, a difference of 17 percent. EBITDA fell to $7.02 million from $9.23 million last year, a 27 percent change, reflecting lower net sales in Engineered Products.
Compared to the fourth quarter of 2016, net sales improved by 11 percent and EBITDA rose by 63 percent, realizing benefits of internal investment, integration and reorganization last year.
During the first quarter, the company's net debt to total capital was reduced from 40.5 percent to 31.2 percent as they continued to pay down their term loan facility and strengthen their balance sheet.
As of May, AirBoss discloses financial information for two new reporting segments: Rubber Solutions and Engineered Products. Rubber Solutions consists of the former rubber compounding segment, plus the industrial products business line previously included in the Engineered Products segment. The reorganized Engineered Products segment combines the defense business with the automotive products business that was previously a separate reporting segment. The changes in financial reporting come after adjustments made in the organizational and governance structures in the company, realigning business units more closely with the nature of the company's operations, according to a statement.
In the Rubber Solutions segment, net sales increased to $30.9 million, up 11.5 percent from 2016. The change reflects stronger demand in the off-the-road, track, automotive, oil and gas, and gas and hose sectors, which was partly offset by weakness in the conveyor belt and solid tire sectors, as well as higher raw material costs that resulting in higher sales prices to customers.
Gross profit for Rubber Solutions for the quarter increased to $5.67 million from $5.36 million in 2016, due to higher net sales and rectification of labor inefficiencies in the industrial business in 2016 relating to the 2015 transfer of production from Vermont to Acton Vale, Quebec. As a percentage of sales, operating income declined to 18.4 percent from 19.4 percent in 2016, a result of higher raw material costs, where prices have been raised accordingly.
In the Engineered Products segment, net sales decreased to $39.1 million, an 8.7 percent difference from last year. The decrease comes primarily in the automotive business, and largely in the bushings and boot product lines where certain customer specification changes resulted in reduced net sales for the period for certain parts. Also, the completion of a large muffler hanger program in the second half of 2016 contributed to the decrease relative to last year.
These decreases were partly offset by increased demand in induction bonding applications. Net sales in the defense business within Engineered Products also decreased from the same period in 2016. Increased net sales in shelters and gloves were more than offset by decreases in the boot and powered air purifying respirator product lines. The decreases in boots was principally due to the completion of two contracts in over-boots and extreme cold weather boots in 2015, with final shipments contracted in Q1 2016. The decrease in net sales resulted in lower gross profit of $5.42 million, or 13.9 percent of sales, in the quarter, compared to $7.81 million, or 18.2 percent of net sales, last year.